Public Statements

Press Release

U.S. Senator Pat Roberts today introduced a bill to block foreign governments from collecting taxes on securities transactions, protecting Americans from additional costs to investors and businesses and avoiding problems such taxes cause to markets.

"In Europe, we have seen the instability these financial transaction taxes have on markets," Roberts said. "A foreign tax is the last thing the U.S. economy needs. We have too many of our own taxes to have to then collect them for the French."

Roberts' bill would prohibit the Secretary of the Treasury from assisting any foreign government with respect to the collection of a tax on securities transactions occurring on a United States exchange. It also protects securities transactions in the United States from enforcement of any excise taxes imposed by the government of France.

Countries that have imposed a financial transaction tax have found that such a tax impedes the efficiency of markets, impairs depth and liquidity, raises costs to issuers, investors, and pensioners, and distort capital flows by discriminating against asset classes. Furthermore, a financial transaction tax by one country that does not include all major financial centers will increase market dislocation and decrease liquidity; which will only serve to shift trading volume to venues that do not impose such a tax.

A vaguely drafted financial transaction tax, such as those being implemented in France and Italy, and under consideration by the EU, will also negatively impact the agriculture sector. Agriculture producers and many other participants in the food production chain hedge all manner of prices that relate to their business. Corn growers use hedging and options to lock in prices, farm coops also actively hedge prices. Fuel prices are also locked in up and down the production chain. Because agriculture is global in scope, these financial transactions are increasingly based on the price, trade or other activity in foreign markets.

"This tax could be especially harmful to farmers and ranchers. It is not uncommon," Roberts said, "for a Kansas farm coop to use a derivative transaction that is based on a foreign financial instrument; they may hedge grain prices based on European or South American grain prices."

A tax on the trades based on a European transaction would filter through to an American taxpayer, even though that taxpayer has no direct connection to the foreign transaction. Foreign governments may also try to force the bank or broker who facilitated a transaction to collect and remit the tax. While the rate of the tax may be small, because of the volume of these trades, the costs can add up. As with other transactional costs, these will be passed on to the end user/customer; a real tax cost passed on to Americans.

U.S. Representative Tom Price (R-GA) is introducing companion legislation in the House.

Senator Roberts is a senior member of the Senate Finance Committee which has jurisdiction on taxes and trade. He is also a member of the Senate Committee on Agriculture Nutrition and Forestry, which has jurisdiction on the Commodities Futures Trading Commission.